Global stock rally pauses as dollar rebounds; oil declines

Bloomberg

The stock rally powered by bets on a speedy global economic recovery from the pandemic paused for breath on Thursday as equities struggled in Europe and Asia. The dollar climbed after five consecutive sessions of declines.
The Stoxx 600 Index opened lower for the first time this week, hours before the European Central Bank announces its policy decision. Futures on the S&P 500 and Nasdaq 100 gauges fluctuated, a day after the tech-heavy index traded briefly above its record-high close. Stocks in Asia were mixed, with Australia’s market leading gains while Hong Kong and Shanghai slipped. Treasuries were steady. Australian 10-year yields rose back above 1% for the first time since March.
After exceptional gains for equities in the past week, investor focus now turns to Frankfurt, where the ECB is expected to boost an already massive monetary stimulus, and to Washington, where US jobs and unemployment data are due. Traders will be looking for further tailwinds for risk assets that have rallied as economies are managing to reopen across the world with little retrenchment.
On the stimulus front, Chancellor Angela Merkel’s coalition agreed on a sweeping 130 billion-euro ($145 billion) package designed to spur short-term consumer spending and get businesses investing again.
Elsewhere, oil declined from a three-month high as Opec+ unity was threatened by a long-running feud and US data cast doubt on the strength of the demand recovery.
The European Central Bank is expected to top up its rescue program with an additional 500 billion euros of asset purchases at a meeting. Anything less than an expansion would be a big shock, Bloomberg Economics said.
Meanwhile the US labour market report on Friday will probably show American unemployment soared to 19.5% in May, the highest since the 1930s.
The Stoxx Europe 600 Index dipped 0.4% as of 9:26 am London time and Nasdaq 100 Index futures sank 0.1%. While the MSCI Asia Pacific Index climbed 0.2%, the MSCI All-Country World Index fell 0.1%.
The Bloomberg Dollar Spot Index jumped 0.3% and the euro dipped 0.3% to $1.1196.
While the British pound dipped 0.5% to $1.251, the Japanese yen weakened 0.2% to 109.14 per dollar.
The yield on 10-year Treasuries advanced one basis point to 0.75% and Germany’s 10-year yield was unchanged at -0.35%. As Britain’s 10-year yield decreased one basis point to 0.266%, Australia’s 10-year yield increased five basis points to 1.0295%.
West Texas Intermediate crude fell 1.5% to $36.74 a barrel and gold strengthened 0.3% to $1,704.09 an ounce. LME nickel dipped 2.2% to $12,590 per metric ton.